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Feliz [49]
3 years ago
9

Contribution margin per unit and break-even units LO P2 SBD Phone Company sells its waterproof phone case for $90 per unit. Fixe

d costs total $135,000, and variable costs are $36 per unit.
(1) Determine the contribution margin per unit.
(2) Determine the break-even point in units.
Business
1 answer:
anastassius [24]3 years ago
8 0

Answer:

Instructions are below.

Explanation:

Giving the following information:

Selling price= $90

Unitary variable cost= $36

Fixed costs= $135,000

First, we need to calculate the contribution margin per unit.

Contribution margin= selling price - unitary variable cost

Contribution margin= 90 - 36= $54

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 135,000 / 54

Break-even point in units= 2,500 units

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The lot-for-lot (LFL) rule is best applied when: a. inventory-carrying costs are high. b. space constraints are low. c. costs as
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The lot-for-lot (LFL) rule is best applied when inventory-carrying costs are high.

Option A

<u>Explanation: </u>

LFL is Lot for Lot and the lot sizing process, where the system considers the order quantity the net specifications for each period. The approach is intermittently appropriate for expensive things or objects.

The bigger the size of the lot, the higher the overall inventory level and the greater the cost of the inventory. However, the expense of the ordering system is smaller since many items are designated to transport and logistics.

The smaller the lot size, the lower the average inventory level. Instead, the purchasing costs of a unit increase. The size of a batch is the most economical when the overall cost of ordering and inventory transport is minimal.

4 0
3 years ago
8. Discuss the risks a business faces when attempting to increase the profit margin of
Sergeu [11.5K]

Answer:

There are major risks when a company attempts to increase the profit margin of a commodity, first if you buy from a cheaper vendor the quality of your commodity will drop affecting the number you sell on average, But if you raise the costs too much then there is the possibility people would be deterred by the cost.

3 0
2 years ago
When consumers respond in a similar way to a given set of marketing efforts, they can be referred to as a(n) _________.
arsen [322]

Answer: The correct answer is "market segment".

Explanation: When consumers respond in a similar way to a given set of marketing efforts, they can be referred to as a <u>market segment.</u>

The definition of market segment refers to a homogeneous and large group of consumers that can be recognized within a market, who have similar desires, buying habits, and who will react similarly to the power of marketing.

Therefore, when they react similarly to a given set of marketing efforts, they can be called a market segment.

5 0
3 years ago
If a firm has a levered beta of .9 and a debt to equity ratio of 1, what is the unlevered beta assuming a tax rate of 30%? (Roun
Ilia_Sergeevich [38]

Answer:

Unlevered beta = 0.53

Explanation:

<em>Beta is a measure of systematic risk. Systematic risk is further divided into business and financial.</em>

<em>Business risk and financial risk. Business risk is that associated with the nature of the business operations that causes variability in the operating income of the business.</em>

This is measured by the unlevered beta where the company has no debt finance.

Financial risk, on the other hand, is associated with use of debt finance . A company that uses a form of debt would face such risk . The systematic risk of such business would be measured using the levered beta.

The formula below shows the relationship:

βa = βe ×  Ve/ (Ve + Vd(1-T) )

βa -Unlevered beta

βe - Levered beta

Ve- Equity weight

Vd- Debt weight

T- Tax rate

DATA

βe- 0.9

βa- ?

Ve-  1

Vd- 1

T- 0.3

βa = 0.9 ×  1/(1 + 1×(1-0.3)=0.529

βa - 0.53

Unlevered beta = 0.53

5 0
3 years ago
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